Health & Fitness
Buying a House: How Much Will You Need for a Down Payment?
How much money will you have to have saved for a down payment on a home? Loan options are available for as little as 3.5% down payment and can range up to 20% down (before closing costs).
It’s been a while since I’ve posted here and since my last post I’ve been thinking of how to best approach this real estate blog. Every day I get questions from clients, family, and friends about buying and selling homes. I remember when my teachers in school used to say ‘chances are that if you have a question, someone else in the room has the same question.’ So, it occurred to me that others in the community likely have the same questions about buying and selling real estate and this would be a great forum to address those questions for others from a local voice.
The first question that I’d like to discuss is “how much do I need for a down payment to buy a house?” This question comes up all the time, especially from first time home buyers. I’ve often spoken with people who’ve told me “I’d like to buy a house, but I don’t have 20% saved for the down payment.” While having 20% saved for a down payment will avoid mortgage insurance fees, many people buy homes for as little as 3.5%-5% down (plus closing costs).
The two most common loan types are conventional loans and FHA loans. An FHA loan is insured by the Federal Housing Administration and requires a minimum down payment of 3.5%. While you’ll pay a lower down payment than with a conventional loan, you’ll pay a monthly Mortgage Insurance Premium (MIP) as part of your monthly payments. Conventional loans are loans that are not insured by the government. Often, when people think of conventional loans they think of putting down a deposit of 20% but there are also conventional loan options for as little as 5% down. If your loan is a conventional loan with less than 20% down you’ll pay a monthly Private Mortgage Insurance (PMI) premium, much like the FHA Mortgage Insurance Premium but less expensive.
A local lender will be able to help determine the best loan option for you.
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Jon Miller, Realtor
Keller Williams Main Line Realty
Find out what's happening in Roxborough-Manayunkwith free, real-time updates from Patch.
215-290-5650 (Preferred)
610-520-0100 (Office)
